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Dollarization Of Liabilities
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Book Synopsis Dollarization of Liabilities by : Mr.Adolfo Barajas
Download or read book Dollarization of Liabilities written by Mr.Adolfo Barajas and published by International Monetary Fund. This book was released on 2003-01-01 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dollarization of liabilities (DL) has emerged as a key factor in explaining the vulnerability of emerging markets to financial and currency crises. "Usual suspects" of causing DL comprise "fatalistic" determinants such as a long history of unsound macroeconomic policies and development and institutional factors, aided by moral hazard opportunities related to government guarantees. This paper assesses empirically the relevance of these factors relative to alternative explanations. Based on a sample of Latin American countries, we find that ongoing central bank intervention in the foreign exchange market, relative market power of borrowers, and financial penetration are at least as important in explaining DL.
Book Synopsis Liability Dollarization and the Bank Balance Sheet Channel by : Woon Gyu Choi
Download or read book Liability Dollarization and the Bank Balance Sheet Channel written by Woon Gyu Choi and published by International Monetary Fund. This book was released on 2002-08 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Banks in developing economies often face a mismatch in the currency denomination of their liabilities (foreign currency denominated debt) and assets (domestic currency loans to domestic borrowers). We study the effect of this mismatch on business cycles and monetary policy in a sticky-price, dynamic general equilibrium model of a small open economy. We find from the model analysis that a fixed exchange rate rule that stabilizes the balance sheets of banks offers greater stability than an interest rate rule that targets inflation in the sticky-price sector of the economy.
Book Synopsis Dollarization of Liabilities by : Ricardo J. Caballero
Download or read book Dollarization of Liabilities written by Ricardo J. Caballero and published by . This book was released on 2000 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: While there is still much disagreement on the causes underlying recent emerging markets' crises, one factor that most observers have agreed upon is that contracting dollar' (foreign currency) denominated external debt as opposed to domestic currency debt created balance sheet mismatches that led to bankruptcies and dislocations that amplified downturns. Much of the analysis of the currency-balance sheet channel' hinges on the assumption that companies contract dollar denominated debt. Yet there has been little systematic inquiry into why companies must or choose to take on dollar debt. In this paper we cast the problem as one of microeconomic underinsurance with respect to country-wide aggregate shocks. Denominating external debt in domestic currency is equivalent to contracting the same amount of dollar-debt, complemented with insurance against shocks that depreciate the equilibrium exchange rate. The presence of country-level international financial constraints justify the purchase of such insurance even if all agents are risk neutral. However, if domestic financial constraints also exist, domestics will undervalue the social contribution of contracting insurance against country-wide shocks. Foreign lenders will reinforce the underinsurance problem by reducing their participation in domestic financial markets.
Book Synopsis Liability Dollarization and Stability by : David E. Cook
Download or read book Liability Dollarization and Stability written by David E. Cook and published by . This book was released on 2000 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Financial Development, Exchange Rate Fluctuations and Debt Dollarization: A Firm-Level Evidence by : Minsuk Kim
Download or read book Financial Development, Exchange Rate Fluctuations and Debt Dollarization: A Firm-Level Evidence written by Minsuk Kim and published by International Monetary Fund. This book was released on 2019-08-02 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how financial development influences the debt dollarization of nonfinancial firms in a sample of emerging market economies (EMEs). The macroeconomic channels are identified from an optimal portfolio allocation model and assessed empirically using the accounting information of nonfinancial firms from 21 EMEs during 2009–2017. The results show that financial development, measured by the private credit-to-GDP ratio, mainly reduces the influence of exchange rate volatility in determining a firm's debt currency composition, among other channels. Furthermore, the effect of exchange rate volatility becomes statistically insignificant beyond an estimated threshold credit-to-GDP ratio of 100 percent.
Book Synopsis Financial Dollarization by : A. Armas
Download or read book Financial Dollarization written by A. Armas and published by Springer. This book was released on 2006-07-14 with total page 349 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume provides a rigorous and balanced perspective on the causes and implications of dollarization, and the basic policies and options to deal with it: the adaptation of the monetary and prudential frameworks, the development of local-currency substitutes, and the scope for limiting dollarization through administrative restrictions.
Book Synopsis Dollarization of Liabilities and the Value of Collateral by : Robert Waldmann
Download or read book Dollarization of Liabilities and the Value of Collateral written by Robert Waldmann and published by . This book was released on 2001 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Exchange Rate Policy and Liability Dollarization by : Pelin Berkmen
Download or read book Exchange Rate Policy and Liability Dollarization written by Pelin Berkmen and published by . This book was released on 2007 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper identifies the contemporaneous relationship between the exchange rate policy and external debt dollarization in a panel of industrial and developing countries. The presence of endogeneity makes the task of empirical identification elusive. The paper uses the method of "identification through heteroskedasticity" developed by Rigobon (2003) to solve the problem of identification in the present context. It finds that, controlling for endogeneity, countries with aggregate liability dollarization tend to be more actively involved in exchange rate stabilization operations, but it finds mixed results for the reverse causality.
Book Synopsis Dollarization of Liabilities in Non-tradable Goods Sector by : Frederic Chabellard
Download or read book Dollarization of Liabilities in Non-tradable Goods Sector written by Frederic Chabellard and published by . This book was released on 2001 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Fear of Floating and Domestic Liability Dollarization by : Adam Honig
Download or read book Fear of Floating and Domestic Liability Dollarization written by Adam Honig and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Previous attempts to analyze the effect of liability dollarization on "fear of floating" have focused exclusively on the role played by foreign liabilities. Liability dollarization of the domestic banking system, however, poses a similar risk as dollar-denominated deposits and credit impose a source of currency risk on domestic banks and firms respectively. Findings from a large cross-country sample indicate that domestic liability dollarization plays a central role in producing a "fear of floating" among emerging market countries and developing nations. This is an important result because domestic liability dollarization is more reversible than the dollarization of foreign liabilities, providing a reason for optimism that these countries can regain flexibility in the choice of exchange rate regime and overcome their "fear of floating."
Book Synopsis Dollarization of Liabilities in Non-Tradable Goods Sector by : Frederic Chabellard
Download or read book Dollarization of Liabilities in Non-Tradable Goods Sector written by Frederic Chabellard and published by . This book was released on 2003 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper questions the motivation of dollar indebtedness by firms of the non-tradable good sectors in a period of exchange rate pressure. Given the structure of banks-indebtedness and protection of banks-foreign lenders, a dollar denominated loan may allow firms to insure (partially) against the risk of an early liquidation of their projects if they turn out to be poor. Then it is shown that under dollarization of liabilities the government may be urged to soften monetary policy to induce a real appreciation that supports the domestic banking system. Therefore, it might be constrained in its ability to enforce an efficient regulatory policy.
Book Synopsis Exchange Rate Policy and Liability Dollarization: What Do the Data Reveal About Causality? by : Pelin Berkmen
Download or read book Exchange Rate Policy and Liability Dollarization: What Do the Data Reveal About Causality? written by Pelin Berkmen and published by INTERNATIONAL MONETARY FUND. This book was released on 2007-02-01 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper identifies the contemporaneous relationship between exchange rate policy and liability dollarization using three different definitions of dollarization. The presence of endogeneity makes the empirical identification elusive. We use identification through heteroskedasticity to solve the endogeneity problem in the present context (Rigobon, 2003). While we find that countries with high liability dollarization (external, public, or financial) tend to be more actively involved in exchange rate stabilization operations, we do not find evidence that floating, by itself, promotes de-dollarization.
Book Synopsis Dollarization and Financial Development by : Mr.Geoffrey J Bannister
Download or read book Dollarization and Financial Development written by Mr.Geoffrey J Bannister and published by International Monetary Fund. This book was released on 2018-09-11 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite significant strides in financial development over the past decades, financial dollarization, as reflected in elevated shares of foreign currency deposits and credit in the banking system, remains common in developing economies. We study the impact of financial dollarization, differentiating across foreign currency deposits and credit on financial depth, access and efficiency for a large sample of emerging market and developing countries over the past two decades. Panel regressions estimated using system GMM show that deposit dollarization has a negative impact on financial deepening on average. This negative impact is dampened in cases with past periods of high inflation. There is also some evidence that dollarization hampers financial efficiency. The results suggest that policy efforts to reduce dollarization can spur faster and safer financial development.
Book Synopsis Financial Dollarization and Central Bank Credibility by : Kevin Cowan
Download or read book Financial Dollarization and Central Bank Credibility written by Kevin Cowan and published by . This book was released on 2003 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Dollarization by : Eduardo Levy Yeyati
Download or read book Dollarization written by Eduardo Levy Yeyati and published by MIT Press. This book was released on 2003 with total page 364 pages. Available in PDF, EPUB and Kindle. Book excerpt: Theoretical and empirical analysis of de jure dollarization. With the persistent instability of international financial markets, emerging economies are exploring new ways to reduce exposure to capital flow volatility. Some analysts argue that financially open economies are best served by more flexible regimes, while others argue in favor of extreme exchange rate regimes that have a strong commitment to a fixed parity or dispense with an independent currency. The successful launch of the euro has made more realistic the prospect of replacing a national currency with a strong foreign one. Recent examples include the adoption of the US dollar by Ecuador and El Salvador. The introduction of a foreign currency as sole legal tender, termed full (de jure) dollarization, has been the center of much political and academic debate. This book provides a comprehensive analysis of the issues from both theoretical and empirical perspectives. The topics discussed include the role of balance sheet effects, the linkage between currency risk and country risk, the impact of dollarization on trade, financial integration and credibility, the implications of dollarization for the lender of last resort, and the institutional and political economy aspects of dollarization.
Book Synopsis A Model of Liability Dollarization and Myopic Governments by : Adam Honig
Download or read book A Model of Liability Dollarization and Myopic Governments written by Adam Honig and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Liability dollarization of the domestic banking system represents a source of vulnerability for emerging market countries. The root cause is a lack of faith in the domestic currency, which ultimately stems from the belief that the government will not follow policies that promote long-run currency stability. This paper presents a model in which government myopia determines the unofficial dollarization of bank credit. Specifically, myopic politicians will choose low interest rates to expand short-run output in order to get re-elected, but this choice has the long-run consequence of increasing dollar lending. Increased liability dollarization is shown to force the hand of future decision-makers into choosing fixed exchange rates because of the fear that large depreciations will destroy balance sheets. The results imply that institutional reforms are necessary to reverse liability dollarization.
Book Synopsis Implementing Official Dollarization by : Mr.Luis Ignacio Jácome
Download or read book Implementing Official Dollarization written by Mr.Luis Ignacio Jácome and published by International Monetary Fund. This book was released on 2010-04-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper identifies key aspects that countries willing to officially dollarize must necessarily address. Based on country experiences, it discusses the critical institutional bases that are necessary to unilaterally introduce a new legal tender, describes the relevant operational issues to smooth the transition toward the use of the new currency, and identifies key structural reforms that are necessary to favor the sustainability over time of this monetary regime. The paper is aimed at providing preliminary guidance to policy makers and practitioners adopting official dollarization. The paper does not take a position on how appropriate this monetary arrangement is. Experiences from adopting dollarization in Ecuador, El Salvador, Kosovo, Montenegro, and Timor-Leste are illustrated briefly.
